Expert Committee on Primary (Urban) Co-operative Banks

In February, 2021 RBI appointed Expert Committee on Primary (Urban) Co-operative Banks under the chairmanship of NS Vishwanathan (Former RBI Deputy Governor) to examine the issues and to provide a road map for strengthening the banking sector.

Key Recommendations: Adopt a simple four-tiered regulatory framework with differentiated regulatory prescriptions aimed at strengthening the financial soundness of the existing UCBs. Specifically, a minimum net worth of Rs. 2 crore for Tier 1 UCBs operating in single district and Rs. 5 crore for all other UCBs (of all tiers) has been stipulated.

• Minimum Capital to Risk Weighted Assets Ratio (‘CRAR’) requirement for Tier 1 banks is retained at the present prescription of 9% under current capital adequacy framework based on Basel I.
• For Tier 2, Tier 3 and Tier 4 UCBs, while retaining the current capital adequacy framework, it has been decided to revise the minimum CRAR to 12% so as to strengthen their capital structure.